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Alex73 [517]
3 years ago
6

Target Costing Portland Equipment Company wants to develop a new log-splitting machine for rural homeowners. Market research has

determined that the company could sell 6,000 log-splitting machines per year at a retail price of $850 each. An independent catalog company would handle sales for an annual fee of $6,000 plus $59 per unit sold. The cost of the raw materials required to produce the log-splitting machines amounts to $95 per unit. If company management desires a return equal to 10 percent of the final selling price, what is the target conversion and administrative cost per unit? Round answer to the nearest cent.
Business
1 answer:
sergiy2304 [10]3 years ago
7 0

Answer:S 610

Explanation:

To get a return of 10% of sales price is to have a profit of S85 which is 10% of S850.

Handling cost per unit S6000/6000 unit=S1

Other handling cost per unit S59

Raw materials per unit=S95

Target conversations and administrative cost is

850-X-60-95=85

850-X-155=85

-X=85+155-850

-X=-610

X=610

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